Litton Industrial Products, Inc. v. Solid State Systems Corp. (755 F.2d 158, 1985)

JACK R. MILLER, Circuit Judge.

Litton Industrial Products, Inc. (“Littón”) appeals from the decisions of the United States District Court for the Western District of Washington (“district court”) that U.S. Patent No. 3,368,280 (“ '280 patent”) is invalid and that Litton violated the Washington Consumer Protection Act, Washington Revised Code § 19.-86.020. Solid State Systems Corp. (“Solid State”) cross-appeals the district court’s decjsion denying an award of damages and attorney fees for Litton’s violation of Washington Revised Code § 19.86.020. We reverse ¡n part> and vacate and remand in part

BACKGROUND

The ’280 patent, as shown in Figure 2 below, is drawn to an ultrasonic device 11 for cleaning teeth with a vibrating work tool 12. Liquid, such as water, is directed through passages 32 and 34 in housing 14 and bores 46 and 50 of shank 44. From bore 50, the liquid bridges across bent portion 54 to impinge distal end 52. Shank 44 is connected to housing 14 by threaded end 48.

Claims 1, 2, and 3 are illustrative:

1. A work tool for an ultrasonic dental device comprising a shank portion adapted to be connected to a connecting body m the device and a single portion : ® . projecting from the shank and termmat-ing in an angled distal work tool end, said shank having a fluid path there-through with a mouth arranged to direct a stream of water flowing through the shank to impinge on the distal end.

2. A work tool as set forth in claim 2 [sic, claim 1] wherein the said shank is provided with a first and a second recess, J® “j? Recess comprising a seat to hold the portion and the second recess . . ,, , , , comprising a through bore to commum-cate with an axia] bore in the shank of the tool, whereby a stream of water is adapted to be directed to the second bore to impinge on the distal end of the tool,

3. A work tool as set forth in claim 2 wherein said angled tool end is formed by a dog leg bend intermediate the distal end and its connection to the shank so that the stream of water bridges the dog leg in flight to impinge on the distal end.

Two weeks prior to the filing date of the '729 application, Robert J. Blank and Bruce Richman filed patent application No. 533,362 (“Blank application”), which was also assigned to C & B. On July 26, 1967, before any prior art was cited against the claims of the ’729 application, Bruce Rich-man received a letter from his patent attorney, Theodore Bishoff, regarding the Blank application (“Bishoff-Richman letter”). One portion of this letter discussed the pertinence of U.S. Patent No. 3,075,288 to Lewis Balamuth, et al. (“Balamuth ’288”) to the ’729 application as follows:

It should be clear that Balamuth [’288]’s Figure 9 anticipates the structure of the liquid passage not only in the transformer or work tool support, but his showing of a slot 138 in the work tool also appears to substantially anticipate your joint and 2nd application with Dr. Charles Friedman [the ’729 application].

Despite this letter, Balamuth ’288 was not cited to the U.S. Patent and Trademark Office (“PTO”) during prosecution of the ’729 application.

As shown below, Figure 9 of Bala-muth ’288 depicts internal passages in ultrasonic dental tool 6 for supplying water to tool 30. By pressing button 136, collar 132 moves against the bias of spring 134 to lift valve plug 130 away from its normally closed position so that water within the tool flows through passages 128 and 127. Slot 138 permits water to leak from passage 127 to tool 30.

In issuing the ’280 patent, the PTO did, however, consider, inter alia, U.S. Patent No. 2,874,470 to James R. Richards (“Richards patent”) and U.S. Patent No. 2,792,-674 to Lewis Balamuth, et al. (“Bala-muth ’674”).

Richards, as shown below in Figure 1, discloses a dental tool 10, which oscillates at high frequency for drilling teeth and filling cavities. Work end wall 31 of tool 10 is provided with a hole 32 through which water from the interior 28 flows to the working area 33 of a tooth. As an alternative to the straight work tip 34 in Figure 1, Richards also suggests angled work tips.

Balamuth ’674 discloses an ultrasonic machine tool, as shown in Figure 1 below, for cutting, grinding, or boring. The tool comprises a mechanical vibration generator 2, a tool holder 6, and a tool 8. Flange 7 of tool holder 6 has a transverse passage 46, which communicates with longitudinal passages 48, to deliver water to work area 50 via grooves 44.

On September 23, 1970, Litton purchased all the stock and assets of C & B including the ’280 patent. In 1974, Litton brought actions against Sybron Corporation (“Sy-bron”) and against Johnson & Johnson, Inc. and Key Pharmaceuticals, Inc. (“Johnson & Johnson”) for infringement of the ’280 patent. In the former action, Sy-bron sought to invalidate the ’280 patent for failure to disclose Balamuth ’288 to the PTO. In the latter action, when Johnson & Johnson requested the production of documents, including the Bishoff-Richman letter, Litton’s outside counsel read the letter to determine whether it was privileged.

On November 6, 1973, Litton sent Solid State a notice of infringement and a copy of the ’280 patent. In June, 1979, Litton brought suit against Solid State for infringement of the ’280 patent. In answering Litton’s complaint, Solid State denied infringement and raised, inter alia, the following affirmative defenses with respect to the claims of the ’280 patent: invalidity under 35 U.S.C. §§ 102 and 103 and unen-forceability for fraudulently withholding Balamuth ’288 from the PTO. In addition, Solid State counterclaimed for a declaratory judgment that the ’280 patent was invalid, unenforceable, and not infringed. An injunction, damages, costs, and attorney fees were sought by Solid State.

On October 25, 1979, Solid State moved for summary judgment on the grounds that the ’280 patent was invalid under 35 U.S.C. §§ 102 and 103. The district court denied the motion under 35 U.S.C. § 102, because it found that the requirements for anticipation were not met. The motion under 35 U.S.C. § 103 was, however, granted with respect to claims 1-4 of the ’280 patent, the court finding that there was no genuine issue with respect to the factual inquiries mandated by Graham v. John Deere Co., 383 U.S. 1, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966). In analyzing the question of obviousness, the court stated that the “most critical feature of [Litton’s] device is the internal fluid path” and that Richards, Ba-lamuth ’288, and two articles discussing the work of Doctors Ewen and Sorrin (“Ewen and Sorrin articles”) were the most relevant references, because they taught this concept. The Ewen and Sorrin articles were held to teach directing a fluid stream to impinge on the end of a work tool. As to the references’ failure to show a shank with an internal water passage and a fluid path for directing a stream of water across a dog leg to impinge an angled distal end of the work tool, these claimed features were deemed “distinction[s] without a difference.” The district court, citing Walker v. General Motors Corp., 362 F.2d 56, 149 USPQ 472 (9th Cir.1966), refused to consider secondary considerations, concluding that obviousness was clear.

Litton filed a notice of appeal with the United States Court of Appeals for the Ninth Circuit, but later withdrew it.

On May 25, 1982, Solid State filed an amended answer and counterclaim, which added counterclaims alleging that Litton engaged in unfair competition under the Lanham Act, 15 U.S.C. § 1125(a), and Washington Revised Code § 19.86.020. The unfair competition counterclaims were based on Solid State’s allegation that Litton refused to sell the invention of the ’280 patent and that Litton threatened to file and did file infringement suits, all with knowledge that the ’280 patent was obtained by inequitably failing to disclose Ba-lamuth ’288 to the PTO.

The Lanham Act claim was dismissed on summary judgment, but, after a trial on the claim under Washington Revised Code § 19.86.020, the district court issued a memorandum decision holding Litton liable. Based on the Bishoff-Richman letter, it held that the examiner would have considered Balamuth '288 important in deciding whether to allow the ’729 application, and that the '280 patent would not have issued had Balamuth ’288 been disclosed. Accordingly, the failure to call Bala-muth ’288 to the examiner’s attention was held to constitute fraud on the PTO, which Litton became aware of during the infringement actions against Sybron and Johnson & Johnson. In view of Litton’s refusal to sell the claimed invention, its threats to enforce the ’280 patent, and its commencement of suit against Solid State, all with the knowledge that the ’280 patent was obtained by inequitable conduct, the district court held that Litton engaged in unfair competition under Washington Revised Code § 19.86.020.

In a separate memorandum opinion on damages, the district court concluded that Solid State's alleged loss of sales to Inter-nat Services, Pelton & Crane Co., and S.S. White Dental Products Company were not due to Litton’s violation of Washington Revised Code § 19.86.020. Solid State was, however, awarded $7,000 (plus interest) in costs and attorney fees incurred while defending against Litton’s patent infringement action.

Litton and Solid State filed notices of appeal and cross-appeal, respectively. Subsequently, Solid State moved to dismiss Litton’s appeal from the district court’s order granting summary judgment and holding claims 1-4 of the ’280 patent invalid, because Litton did not appeal within 30 days of that order. Fed.R.App.P. 4. The motion was denied in an unpublished order, dated March 13, 1984, because the district court’s order was not a final judgment and, therefore, was subject to revision at any time prior to such judgment.

ANALYSIS

_ . 1. Summary Judgment on Obviousness

It is well settled that obviousness is a question of law based on the following factual determinations: (1) Scope and content of the prior art; (2) The differences between the prior art and the claimed invention; (3) The level of ordinary skill in the pertinent art; and (4) Other (“secondary”) considerations, which may serve as indicia of unobviousness. Graham v. John Deere Co., 383 U.S. at 17-18, 86 S.Ct. at 693-694; Environmental Designs, Ltd. v. Union Oil Co. of California, 713 F.2d 693, 695, 218 USPQ 865, 867 (Fed.Cir.1983), cert. denied, — U.S.-, 104 S.Ct. 709, 79 L.Ed.2d 173 (1984).

Although patent infringement suits often involve numerous complex factual issues, trial courts may decide an obviousness question by summary judgment under Federal Rule of Civil Procedure 56 where there is no dispute over the underlying factual determinations. Chore-Time Equipment, Inc. v. Cumberland, 713 F.2d 774, 778-79, 218 USPQ 673, 675 (Fed.Cir. 1983). In deciding whether summary judgment is appropriate, the trial judge should look beyond mere denials or arguments with respect to the factual determinations underlying an obviousness question and resolve all doubt over factual issues in favor of the party opposing summary judgment, Union Carbide Corp. v. American Can Co., 724 F.2d 1567, 1571, 220 USPQ 584, 588 (Fed.Cir.1984). However, we are satisfied with the district court’s finding in this case that there are no factual issues in genuine dispute.

Litton attempts to raise issues of fact with respect to the scope and content of the prior art by referring to the testimony of Litton’s former project engineer for dental scalers, Dale 0. Cranston (“Cranston”), at the unfair competition trial. Such testimony, coming after the motion for summary judgment was granted, cannot retroactively raise an issue of material fact. In attempting to overturn the district court’s decision on summary judgment, Litton must point to an evidentiary conflict created on the record at least by a counterstatement of fact jn its opposition to the motion for summary judgment. See Barmag Barmer Maschinenfabrik AG v. Murata Machinery Ltd., 731 F.2d 831, 836, 221 USPQ 561, 564 (Fed.Cir.1984). Although Cranston also executed an affidavit, which accompanied Litton’s opposition to the motion for summary judgment, that affidavit raised no genuine issues of material fact with respect to the scope and content of the prior art. Solid State has, of course, consistently urged that there were no disputed issues of fact with respect to the scope and content of the prior art. Furthermore, it is apparent from the district court’s opinion that the court agreed with Cranston’s analysis of the prior art. Accordingly, we con-clude that there 18 no disPute in record over sc°Pe and content of the prior art.

Further, there is no dispute with respect to the differences between the prior art and the claimed invention. Although Litton cites various deficiencies in the teach-ings of Richards, Balamuth ’288, and the Ewen and Sorrin articles, these shortcomings were noted by the district court and, of course, not disputed by Solid State. It appears that Litton’s problem with the dis-trict court’s decision on differences be-tween the prior art and the claimed invention goes only to the ultimate question of obviousness. This being a question of law, a dispute on its ultimate resolution cannot raise a genuine issue of fact needed to prevent summary judgment,

Litton also faults the trial court for not making a specific finding on the level 0f or